Dubai's non-oil private economy continued to improve in December on sharp output rise

New orders climbed on growing consumer demand while input costs fell for a third time in five months

Downtown Dubai. The emirate's non-oil economy remained robust in December. Reuters
Powered by automated translation

Business activity in the Dubai's non-oil private sector economy remained strong in December, boosted by a sharp increase in output as new orders climbed amid rising customer demand at the end of last year.

The emirate's seasonally adjusted S&P Global purchasing managers' index reading in December edged higher to 55.2, from 54.9 in November, firmly above the neutral 50 mark separating expansion from contraction.

Although the output growth was at its slowest since February, it indicated a strong improvement in operating conditions across the non-oil sector of the emirate, the survey said.

“Growth in Dubai non-oil activity … remained robust and stronger than the average seen since the survey began in 2010,” said David Owen, an economist at S&P Global Market Intelligence.

“Firms linked the expansion to a sharp upturn in new order inflows and a continued improvement in demand conditions.”

Cost pressures eased as input fees fell for the third time in five months, owing to an improvement in supply conditions, the survey said.

“The emirate is performing much better than global economic trends for activity and demand,” Mr Owen said.

The latest data signalled a strong expansion in output levels at the end of the year.

Businesses in Dubai, the commercial and tourism centre of the Middle East, again highlighted a rise in new order volumes amid improving consumer demand.

The upturn in December was “broad-based”, with sharp increases recorded in the construction, wholesale and retail, and travel and tourism sectors of the emirate.

New work by construction companies rose at the strongest pace in about two years.

Dubai's economy expanded by 4.6 per cent on annual basis in the first nine months of 2022, with wholesale and retail trade accounting for 24.1 per cent of its gross domestic product, according to the Dubai Statistics Centre data.

The Dubai economy grew 6.2 per cent in 2021 and expanded 5.9 per cent in the first three months of 2022 as its tourism and retail sectors reported a sharp Expo 2020-driven boost, according to government data.

Dubai hosted 10.12 million international visitors from January to September last year, compared with 3.85 million visitors during the same period in 2021, an annual growth of 163 per cent.

The emirate's property sales transactions had their best November since 2011 amid a continued upswing in the market last year, according to Property Finder.

Dubai businesses also increased staffing in December, although at a softer pace, with employment numbers improving slightly from November.

By sector, employment growth was mainly driven by the construction and wholesale and retail sectors. Staffing was broadly unchanged in the travel and tourism sector last month, the survey said.

Companies also expanded stocks at a “solid and accelerated rate” last month, amid higher input requirements for project work.

The easing of inflationary pressure from highs recorded earlier this year encouraged Dubai businesses to offer additional price discounts at the end of the year.

Output charges fell for the fifth consecutive month at a pace faster than in November, according to the survey data.

Updated: January 10, 2023, 2:09 PM